- - - WHY PARLUX IS FAILING - - - -

Celebrity names can sell loads of stuff, but these days, they’re stinking up the perfume business.

Indeed, sales of celebrity-branded fragrances are going out of favor faster than the last Britney Spears single, according to TheStreet.com.

Some of the decline, experts suggest, is because consumers may be embarrassed to use a celebrity fragrance.

“On blind scent tests many of these fragrances test extremely well; they're designed to be the least offensive and offer the broadest appeal,” Karen Grant of the market research firm NPD Group told TheStreet.com. “But when a celebrity is associated with it, you see a different reaction.”

Fragrance peddler Parlux France relies heavily on its celebrity branded scents and has taken a hit for it. The company produces Queen Latifah’s Queen, Jessica Simpson’s Fancy and Fancy Love, Andy Roddick's Andy Roddick and all of Paris Hilton's many fragrances (Paris Hilton, Paris Hilton for Men, Heir, Heiress, Just Me, Can Can, Fairy Dust and Siren).

The company lost $4.3 million last year and $2.5 in the second quarter of this year alone.

While the prestige fragrance market as a whole is down 10% from last year, Britney Spears is one celeb who appears to be bucking the odds.

Sales of her fragrances - Fantasy Britney Spears, Britney Spears Believe, Curious Britney Spears and Curious in Control Britney Spears - rose 13% in the June quarter. Elizabeth Arden, the company behind the ageing pop tart's perfumes, just brought out Circus Fantasy, named after her latest tour and album.

Then again, she’s global.

“More than half of the sales of Britney brands were sold of outside of North America,” said an Arden company spokesman.

Also doing well are classics like Chanel's Coco, Mademoiselle and No. 5 and Dolce and Gabbana's Light Blue. But it remains to be seen how Forever Mariah Carey, Derek Jeter Driven Black or Sara Jessica Parker's Lovely will fare in recessionary times.

"If they do, we approach $5 quickly and I am no longer a parling." - WRONG, you will always be a Parling. It's kind of like being an alcoholic. The only clarification will be as to whether you are a recovering Parling or not.

"Merely getting sales will not give us any real idea of earnings. A look at the last three years reveals why."

It gets us started. Above $60 million and Les Neilbo, Chubby, and Butt have more cushion to have spent. We don't know what they actually did with controlling A&P. I'm guessing they spent a bit over last year. If they actually reduced their spending, its off to the races.

In regard to any losses on Guess, with Nuss as the distributor of last resort, I find it hard to believe that management lost anything on that smell. Of course, management is Les Neilbo, Chubby, and Butt.

"We are very close in our POV which has me feeling oddly comfortable about PARL."

There was a time when I tracked each brands' sales per Q. I haven't done that for awhile. Now, I just work from memory. However this is not a complicated company--yet.

We have POS's projected goals, CCs on their site, etc. We are now getting agreements on the SEC portal, etc.

So, using that, our guesses should be close. Right now, we have to "hope" that the 3.5 percent growth reported by retail equally affected fragrance. If it did, and with the new fragrances, we could break $60 million.

By the end of the week, we should be hearing that the unemployment rate dropped. Maybe that will pop this market. If management reports sales above $60 million this week, we could see the $3s. It would be nice if they said JZ was signed and that #4 was signed. If they do, we approach $5 quickly and I am no longer a parling.

Merely getting sales will not give us any real idea of earnings. A look at the last three years reveals why.

Fiscal 2007 - Sales were $43.4M. Earnings were -$0.30.

Fiscal 2008 - Sales were $44.5M. Earnings were $0.01.

Fiscal 2009 - Sales were $47.3M. Earnings were -$0.22.

As is always the case, the devil will be in the details. This will be especially true this year with the selloff of the Guess inventory. With $18M to sell going into the quarter, the key question will be what profit they made on the inventory. The other major variable will be the spend. Did Neil get into a cost reduction mode quickly enough?

I'm afraid that we will have to wait till early February to get the whole story. Earnings will then drive the stock price.

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